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Mervyn King bows to Fed-style rescue deal

BRITAIN’s banks believe they have secured a deal under which the Bank of England will provide the kind of support America’s Federal Reserve has given to its beleaguered financial institutions in recent months.

Though no precise commitments were given when senior bank executives met Mervyn King, the Bank’s governor, last week, it is understood that there was tacit agreement that the central bank would step in to provide bigger injections of liquidity into the markets when needed, and accept a wider range of collateral against such support.

The Bank also promised to try to limit any stigma attached to such assistance, though officials concede this will be difficult.

King fell short of meeting all the bank chiefs’ demands, including requests for an overhaul of the entire system under which emergency funding is provided. The Bank’s new money-market arrangements only came into effect last year. The new help will be given